In brief, what are the practice changes?

• There are several practice changes following NAR’s settlement agreement resolving claims brought by home sellers related to broker compensation.

• Consumers can broadly think about the changes in two categories: 

  • First, written buyer agreements are now required and must meet certain criteria. Buyers and their agents will need to reach an agreement regarding how the agent will be compensated for their services and put it in writing prior to touring a home. More details on those agreements are below.

  • Second, offers of compensation (when a seller or a seller’s agent shares compensation with a buyer’s agent) can no longer be shared on Multiple Listing Services (MLS). MLSs are local marketplaces used by both buyer and seller agents to share information about homes for sale. Offers of compensation are still an option but must be communicated off-MLS if a seller chooses to make an offer available.

• What’s important to know is these practice changes provide consumers on both sides of a residential transaction with additional choice and transparency. (Added 9/5/24)

How do the practice changes impact homebuyers?

• The settlement empowers consumers with additional choice and transparency when buying a home.

• As part of the new practice changes, you will need to sign a written agreement with your agent before touring a home.

• Before signing this agreement, you should ensure it reflects the terms you have negotiated with your agent and that you understand exactly what services and value will be provided, and for how much.

• The buyer agreement must include four components concerning compensation:

  • A specific and conspicuous disclosure of the amount or rate of compensation the agent will receive or how this amount will be determined.

  • Compensation that is objective (e.g., $0, X flat fee, X percent, X hourly rate)—and not open-ended (e.g., cannot be “buyer broker compensation shall be whatever the amount the seller is offering to the buyer”).

  • A term that prohibits the agent from receiving compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer; and,

  • A conspicuous statement that agent fees and commissions are fully negotiable and not set by law.

• Written agreements apply to both in-person and live virtual home tours.

• You do not need a written agreement if you are just speaking to an agent at an open house or asking them about their services.

• The seller may agree to offer compensation to your agent. This practice is permitted, but the offer cannot be shared on an MLS.

• You can still accept concessions from the seller, such as offers to pay your closing costs.

• Compensation for your agent remains fully negotiable and is not set by law, and if your agent is a REALTOR®, they must abide by the REALTOR® Code of Ethics and have clear and transparent discussions with you about compensation.

• When finding an agent to work with, ask questions about compensation and understand what services you are receiving.

• Agents who are REALTORS® are here to help you navigate the homebuying process and are ethically obligated to work in your best interest. (Added 9/5/24)

Retrieved from:https://www.nar.realtor/the-facts/nar-settlement-faqs